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What are some main solutions for consumption negative externalities, such as smoking?

Negative consumption externalities derive from the marginal personal benefit being higher than the marginal social benefit. This creates a welfare loss triangle, which the government tries to avoid. Demerit ...
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Answered by Nicole K. • Economics tutor
4949 Views

Evaluate the impact of a tax on sugar drinks. (This is probably more A-level than GCSE)

Analysis: First define tax and explain that this could be ad valorem (percentage of price) or per unit (set tax per unit). Explain why the government would want to do this - overconsumption can cause obesity...
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Answered by Bronwen L. • Economics tutor
2671 Views

Explain the effect of a subsidy on equilibrium price and quantity in a demand and supply model.

If the government offer a subsidy to firms, this will reduce their per unit cost of production. This will shift supply downwards, as for a given market price, the firm is willing to produce more. This will r...
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Answered by Anna R. • Economics tutor
21495 Views

Explain the impact on a firm due to an increase in the minimum wage.

The firm’s costs will increase as they will have to pay each worker more per hour due to the new minimum wage. This means that they will have less profits for their shareholders, and less money to invest. Ho...
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Answered by Megan K. • Economics tutor
2092 Views

Assess the likely macroeconomic effects of an increase in house prices on the UK economy

An increase in house prices is likely to cause a wealth effect in the UK economy. The wealth effect is defined as an increase in consumer expenditure when their portfolio performance is high. In this case, h...
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Answered by Dilan P. • Economics tutor
18510 Views